Mining firms need to clean up their online disclosure, regulators say, after a review found that the investor presentations provided by many firms on their websites are overly promotional, and sometimes even misleading.

The Canadian Securities Administrators (CSA) Thursday released CSA Staff Notice 43-309 Review of Website Investor Presentations detailing the findings of a review of website disclosure by mining issuers, which make up 43% of reporting issuers. The regulators reviewed 130 firms and found that, in general, “there is room for improvement for mining issuers to comply with disclosure requirements.”

The CSA assessment found “major non-compliance” at 25% of the 130 investor presentations it reviewed, and “minor non-compliance” at another 57% of them. Only 18% were deemed to be substantially compliant.

It says that some firms use language that is too promotional, or even misleading, which could result in a misrepresentation to investors. This sort of hype was more commonly seen with exploration or mineral resource stage issuers, it notes.

For example, the report says that these firms sometimes detail anticipated economic outcomes for mining projects that suggest it is “at a more advanced stage of development than is supported by the existing technical report.” This sort of disclosure may trigger the requirement to file a technical report to support the economic projections, the report notes.

The report notes that the level of compliance increases at firms that have named a “qualified person” (QP) to review technical data. Among these firms, 28% were found to be compliant, and only 15% were assessed as being in major non-compliance. “We saw improvement in disclosure of exploration targets, mineral resources and mineral reserves, historical estimates and exploration information,” it says, although no improvement was noted with disclosure of economic studies.

As a result of the review, the CSA reports that it sent letters to 49 issuers requiring them to amend their investor presentations and correct the non-compliant disclosure.

The report also highlights the areas where firms generally need to improve disclosure, such as: naming a QP; including cautionary statements so investors can understand the limitations of preliminary economic assessments; detailing the sources and assumptions underlying historical estimates; and, avoiding excessively promotional language, among other things.

“Overall, our review found that mining issuers’ website disclosure needs improvement. Incomplete information and overly promotional language are key areas of concern. We expect mining issuers to use this notice to improve their disclosure to investors,” said Louis Morisset, chairman of the CSA and president and CEO of the Autorité des marchés financiers (AMF).